Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fluidra SA (FLUIF, Financial) delivered a strong 2024 performance with sales and adjusted EBITDA growing by 3% and 7%, respectively.
- The company returned to year-on-year volume growth for the first time since 2021, with Q4 sales up 9% across all regions.
- Fluidra SA (FLUIF) achieved double-digit growth at the net profit level and improved cash generation, reducing leverage.
- The simplification program is on track, contributing to margin expansion and expected to deliver EUR100 million in savings by 2025.
- The company is well-positioned for sustained leadership in the global pool industry, with a focus on organic growth and margin expansion in 2025.
Negative Points
- Despite strong performance, Fluidra SA (FLUIF) faces macro and geopolitical uncertainties that could impact future growth.
- Operating expenses increased by 10% due to higher production volumes, inflation, and increased provisions, partially offsetting gross margin improvements.
- The company anticipates potential impacts from tariffs on Mexican imports, which could affect financial performance if not mitigated.
- New construction demand remains weaker year-on-year, with softer markets in France and Central Europe affecting overall growth.
- Free cash flow decreased to EUR85 million from EUR160 million last year, driven by lower contributions from net working capital and higher cash taxes.
Q & A Highlights
Q: What drove the strong performance in North America during Q4, and can you provide a breakdown of pricing versus volume? Also, could you elaborate on the guidance for 2025, particularly the factors influencing the top and bottom ends of the guidance?
A: The strong Q4 performance in North America was primarily driven by volume, with 8% of the 9% growth attributed to volume and 1% to pricing. The aftermarket segment remains robust, contributing significantly to market share gains. Regarding 2025 guidance, we anticipate stable new construction demand and growth in the aftermarket and commercial pool segments. The guidance reflects potential macroeconomic and geopolitical uncertainties, with new build expected to be flat or slightly up, and aftermarket growth projected at 1-2%.
Q: Can you provide more details on the US trends, particularly the sell-in and sell-out dynamics, and whether the Q4 growth is sustainable?
A: The sell-in and sell-out dynamics were closely aligned, particularly in the US market, where we have reliable data. The 14-15% growth in Q4 was exceptional, and we expect this trend to continue into 2025, as reflected in our growth expectations.
Q: Could you elaborate on the action plan in case of US tariffs, and what regions are you more positive or cautious about regarding new build activity?
A: Our action plan for potential US tariffs includes supply chain adjustments, cost savings, and pricing strategies to offset the impact. We expect new build activity to be flat in the US, with a slowdown in France and Central Europe, while Southern Europe remains strong. The aftermarket segment continues to be resilient, and we are gaining market share.
Q: What is driving the increase in OpEx, and what should we expect for 2025? Also, can you clarify the cost of the simplification plan and net debt expectations?
A: The increase in OpEx is due to higher production volumes, inflation, and investments in digitalization. For 2025, we expect some normalization in production volumes and continued investments in growth. The simplification plan costs are slightly above the initial EUR100 million target due to additional initiatives. Net debt is expected to improve significantly with strong cash generation.
Q: How do you compare your exposure to Mexico and China with competitors, and what steps are you taking to diversify your procurement base?
A: Approximately 50% of our North American sourcing comes from Mexico, with 15% from China. We are negotiating with current suppliers and exploring new supplier bases to diversify procurement. We are confident in our plan to offset the impact of potential tariffs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
